London Mayor Boris Johnson has struck a ground-breaking deal that will see institutional investment used for the first time in the UK to build a large-scale residential rental development.
The completed block, at Elephant & Castle, will be the largest private rental development of its kind in the country. Its financial backers are a US equity firm with experience of the American multi-family private rent model.
Developers Mace and Essential Living will build the tower, on council-owned land, creating 462 units, of which three-quarters will be for long-term private rent.
The developers have secured institutional backing via M3 Capital Partners working with Essential Living.
The Mayor has actively sought to encourage institutional investors such as pension funds and insurance companies to invest in residential construction and take development risk in order to increase and accelerate the number of homes being built.
The Elephant & Castle deal, the Mayor’s office said, is set to encourage other institutions to invest in developments across the capital.
The homes will also be available on long leases and will mirror similar style longer-term rental apartments in large cities in the US.
Darryl Flay, chief executive of Essential Living, said: “The Mayor must be commended for leading the way in creating a new, truly professional rental market where tenants are treated like customers, with great amenities, longer leases and a home actually designed for renting.
“With a quarter of Londoners now renting mainly from amateur landlords, it is vital that we create a branded sector that can deliver real quality for the first time.”
Work on the tower will begin early next year and is earmarked for completion in 2017.
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